When it is acknowledged that you need life insurance your thoughts will then focus on how much cover you need and how much it will cost. Life insurance rates have never been put under the microscope as they have been since the advent of the internet. In the past most life insurance was sold by agents going from door to door, telephone sales followed, but today if you are seeking life insurance you only need to type those two simple words into your computer. You may have already Googled ‘life insurance’ and are now sifting through the 144,000,000 results. If you typed in ‘life insurance rate’ you would have gotten just 70,400,000 results, but either way that is a lot of information, so what can you do about it?

What is a Life Insurance Rate?

Firstly you will need a full understanding of what life insurance is really all about. This is best kept as simple as possible, because life insurance itself is simple, and it is unfair to the person seeking information to complicate it, it is not a complicated subject. Life insurance is your willingness to pay a regular premium in order that your beneficiaries will receive an agreed amount of money should you die while the agreement is in force. The amount of money they receive in the event of your death will be determined by the amount of premium you are willing to pay and the premium in turn will depend on your age and health. The premium is what is known as known as the life insurance rate.

What Causes a Life Insurance Rate to Differ From Another?

There are many factors that lead to a variation in life insurance rates. The main one being the type of life insurance you decided to purchase. There are only two types of life insurance to worry yourself about, these being:

• Term life insurance. Term life insurance is what some people call ‘pure’ life insurance. It can be compared to your home or car insurance, as it is taken out over a prescribed term. Once this term has expired and you remain alive the money you have paid in premiums is forfeited and the insurance cover lapses. It has the lowest life insurance rate and because of this large amounts can be purchased giving considerable protection when your responsibilities are at their greatest. Once the term of cover expires, however, you will need to take out another new cover to keep yourself insured, but the life insurance rate will be increased because you have gotten older and to your insurer the risk of you dying is greater.
• Whole of life insurance. As its name suggests this type of life insurance is meant to last you the whole of your life no matter how long that will be. It is much more expensive than term life insurance but this is because the insurance company providing the cover knows that regardless of whether you live to an old age, or die while still young, it will, one day, have to pay out the full amount you have insured yourself for. To accomplish this, whole of life insurance has a saving component built into it over and above the life insurance rate. This money is invested and it is always available to you at its cash value whenever you should want to surrender your policy, or alternatively, you can borrow from it and still retain the insurance cover on your life. Because of its greater cost you might want to purchase whole of life insurance as a staple life insurance cover to last your whole life and buy shorter term cover at larger amounts to cover the periods when your family has much to lose with your untimely passing. For example, while you owe a large sum on your mortgage or while raising a family.

Other factors that influence a life insurance rate can be your age as well as your gender. When you’re young your risk of dying is much less than it is in old age and this is reflected in the life insurance rate charged by insurers. Women can usually obtain life insurance at a lower rate than their male counterparts can. Both these factors are driven by life expectancy, as the longer the insurance company feels you have to live, the longer they have to obtain premiums from you and get their money backs. The same holds true for your health. Many life insurance companies will offer a cheaper rate to non-smokers than they do for smokers as it is believed that a non-smoker is a lesser risk than a smoker.

How Much Life Insurance Do I Need?

Your life insurance rate will also be influenced by the amount of cover you need and this will change at different periods of your life. This is why a permanent life insurance like whole of life should act as your basic long term foundation and term insurance purchased to cover the times when you carry heavy responsibilities.